Some Representatives who voted for the "AIG tax" privately expressed regret after the emotional vote.  It doesn’t look like it’s actually going to pass now.  Looks like we might have dodged that bullet.

Or not.

But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.

(Emphasis mine.)  The bill passed in the Financial Services Committee on a nearly-party-line vote.  I’ll let you guess which party was for it and which against. 

The government is doing what government does best; increase its power.  When there is that much money flowing around DC, it is bound to become the tool used to that end.  Tax cuts and smaller government would reduce that ability, if not that propensity.  Our founding father knew this very well, which is why we started out with a more decentralized form of republic.  Over time, the federal government has indeed become powerful enough to buy into the public sector and start running the show, deciding who can work for your company and, if this passes, for how much.

Remind me again how these very fears were, and are still, labeled "paranoia"?

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Filed under: Economics • Government

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